Mack Could Get Army Contract Government Seeking $40 Million Deal For 500 Tank Haulers

December 22, 1990|by DAN SHOPE, The Morning Call

Mack Trucks Inc. has come close to being drafted into Operation Desert Shield, sources close to the company said yesterday.

The U.S. government has been talking with the Allentown-based truck maker about a $40 million contract for 500 tank-hauling trucks with high-powered E-9 engines, the sources said.

Delivery was originally set for Jan. 10 -- five days before the United Nations' deadline for Iraqi President Saddam Hussein to pull his troops out of Kuwait.

But the deal now is on hold, because Mack wasn't able to produce the tank haulers in such a short time, the sources said.

"They wanted them faster than we could make them," a union official said yesterday. "Right now, it's up in the air."

Mack officials said yesterday there was no deal.

Officials from the Army in Washington, D.C., said they were looking into the contract and had no further information.

The waffling came as Army Lt. Gen. Calvin Waller told reporters Wednesday in Saudi Arabia that the buildup of ground forces in that country might not be complete until mid-February.

Waller, deputy commander of ground forces in the Persian Gulf, said he would advise President Bush not to order an attack until all U.S. forces were prepared to fight.

Meanwhile, another Pennsylvania truck maker, Harsco Corp., said yesterday it has reached an agreement with the Army to modify a contract for a five-ton truck.

Harsco said the contract will be set at 17,092 trucks and options for additional trucks will be canceled. The company also said it will withdraw more than $50 million in claims against the Army but will continue to pursue claims in excess of $55 million.

Harsco is based in suburban Camp Hill, Cumberland County. The trucks are being produced in Marysville, Ohio. Harsco said it hopes Operation Desert Shield and other needs by foreign countries will generate more demand for the trucks.

Mack employees were told Monday of the possible deal with Mack, when United Auto Workers officials and Mack's top management met at world headquarters, according to the Unity News, a UAW newsletter handed out to about 700 employees Thursday at Mack's assembly plant in South Carolina.

During the meeting, Mack Chairman and Chief Executive Officer Elios Pascual told UAW Secretary-Treasurer Bill Casstevens that the company had received confirmation on an order for the 17,000-pound tractors, the newsletter said.

Work on the high-powered V-6 engines and transmissions would be done at Mack's 1,500-worker powertrain facility in Hagerstown, Md.

Assembly of the trucks would take place at the 750-employee Macungie plant, which was to prepare a special line for their production.

Mack contacted the union late Thursday, telling those who write for Unity that the deal is off, a Mack spokesman said.

But industry experts said Mack, like no other company, would have the capacity to make large tank haulers quickly because it is the only U.S. truck maker that makes its own engines and transmissions rather than hiring subcontractors.

"The RD 800 models used as tank haulers are super big," said Jim Winsor, executive editor of Heavy Duty Trucking magazine. "They are also used to haul logs in Canada and coal in our Appalachian states. They are the backbone of the off-highway business."

Throughout Mack's 89-year history, Mack vehicles have maintained a reputation for ruggedness. It was the Mack AC model that the English nicknamed "the bulldog" during its use in France during World War I.

In World War II, Mack specialized in military vehicles.

Possibly its most potent weapon was a support vehicle for tanks, used while Germany relied on railways for supplies, according to the book "Mack" written by John B. Montville.

Also during World War II, Mack's old 5C assembly plant in Allentown was converted into an aircraft factory, producing the Vultee airplane.

But Mack's stubbornness to remain "fully integrated" has been part of the company's downfall in recent years.

With Mack's losses mounting toward $180 million for the second consecutive year, French-owned Renault Vehicules Industriels recently acquired the 55 percent of Mack that it hadn't previously owned.

"Macks are known for being durable and big," said Gary McManus, an industry analyst for Merrill Lynch of New York. "I can understand why the government would come to Mack.

"The truck market is down, so this isn't like they're catching Mack when it's busy. But this is probably too short a notice. I don't know how they'd receive parts and components from vendors."